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Obsolescence Management for SMEs

Aug. 19, 2022
Seven steps for getting the most out of legacy equipment.

“Let our advance worrying become advance thinking and planning,” Winston Churchill once said.

Small and medium enterprises (SMEs) are increasingly concerned about equipment and components becoming obsolete, and the damage this can cause to productivity, profits and reputation.

Outdated equipment creates several disadvantages. 52% of manufacturing employees, surveyed by Atomik Research on behalf of Shire Leasing, said that outdated equipment regularly hindered their work.

47% said more than half their factory equipment was used less than four months per year on average, due to it being outmoded. Equipment and component lifecycles are also getting shorter. Focussing on electronics, IHS Market, part of S&P Global, reports that the average lifecycle of integrated circuits (IC) has decreased by about 30% on average over the past two decades.

What’s causing this increased rate of obsolescence? Source Today suggests that a growing number of mergers and acquisitions of component supplier-base companies may be behind the trend. In these cases, the newly-merged company will often discontinue certain product lines to eliminate product redundancy.

That article cites Celestica, the electronics manufacturer, which says it observed a 15% increase in the number of end-of-life (EOL) notifications it received from component suppliers within 18 months.

It is critical that the lifespans of equipment, parts, and materials are factored into a plan to replace them as they age and become obsolete. However, rising obsolescence will make obsolescence management an even greater concern for manufacturers, especially for SMEs. They face particular pressures to reduce costs while maximizing productivity, and cannot afford the hindrances to profitability highlighted in Atomik Research’s survey.

Maintenance 4.0

One way in which SMEs should tackle obsolescence is by ensuring their legacy equipment stays up and running for as long as possible. This means devising and implementing an effective obsolescence management strategy that can help them prepare for similar issues post-pandemic.

An effective obsolescence management strategy should take into account the lifespan of all equipment and components in the production plant. Whatever the machinery or process, the objective is always the same: to replace obsolete parts as they age and before they impact productivity or cause downtime. Traditionally, these problems would go unnoticed unless an expert is on-hand to investigate the asset, observe any symptoms of failure and take preventative maintenance steps.

Instead, this is where Maintenance 4.0 can play a vital role. Maintenance 4.0 is the phrase used to describe the digitalization of maintenance technologies that collect, monitor, and analyze data generated by industrial assets. To fit the criteria of Maintenance 4.0, these technologies must diagnose problems faster than a human engineer would, following a planned or preventative maintenance schedule.

Industry 4.0 sensors attached to equipment at the device level can support real-time adjustments, so preventative maintenance becomes possible. Data gathered by sensors can be fed back to a plant’s supervisory control and data acquisition (SCADA) and manufacturing execution systems (MESs) and then processed, analyzed, and visualized by engineers in real time. Through these improved processes, Maintenance 4.0 becomes possible.

Sensors are becoming less costly. Goldman Sachs and BI Intelligence reports that, between 2004 and 2014, the average cost of Internet of Things (IoT) sensors dropped by more than half. This makes sensors and their data more accessible to SMEs.

Data from sensors can also be used to develop an obsolescence management strategy, which generally comprises seven steps. The first three steps are system assessment, resource planning, and risk analysis. In short, this means manufacturers should analyze their equipment to know old everything is, and flag any signs of damage that could impact the equipment’s performance. Equipment that’s already obsolete should be addressed immediately, and corrective action must be implemented.

To collect any equipment-specific lifecycle information, it is recommended to look at the original equipment manufacturer (OEM)’s website or contact them directly. Then, firms can simply request information on the availability of spare parts and get in touch with a specialized supplier.

Taking Stock

The next two stages in a seven-step obsolescence management strategy are to create a database and review and update this information accordingly. Just like larger manufacturers, SMEs need a structured approach to identifying risk in their facilities. The stakes are higher with smaller production lines, as equipment failures have a relatively-larger impact on productivity—and their reputation.

Data on obsolescence risks throughout a plant should be as easily accessible as possible. In reality, this could be as simple as creating a spreadsheet that highlights areas of concern on the factory or shop floor, with suggestions on how to proceed to manage the risk and deploy these processes when necessary. Obsolescence management is an ongoing process, so any spreadsheet should be treated as a living document that manufacturers regularly update.

The database can also help with the last two steps in our obsolescence management strategy: finding the right supplier, shopping, and stocking parts. Put simply, the database should contain the contact information of a trustworthy supplier that specializes in obsolete automation parts, and who will be ready to assist manufacturers when legacy components need to be replaced.

Although SMEs face growing challenges with outdated equipment, implementing an effective obsolescence management strategy can help mitigate risk, reduce costs and streamline productivity. Identifying the objective of such a strategy, taking stock of at-risk parts, and collating the resulting data are all key steps when creating such a plan.

About the Author

Claudia Jarrett | Head of Sales - The Americas, EU Automation

Claudia Jarrett is the Head of Sales for The Americas at EU Automation. EU Automation stocks and sells new, used, refurbished, and obsolete industrial automation spares. Its global network of preferred partner warehouses and wholly owned distribution centers enables it to offer a unique service within the automation industry, spanning the entire globe. It provides worldwide express delivery on all products meaning it can supply any part, to any destination, at very short notice.